Are AI hiring tools adding risks to your business?
For many companies, artificial intelligence used in the talent management process lacks proper oversight or formal policies.
Artificial Intelligence (AI) has permeated much of our lives including how companies are using them for recruiting and hiring purposes, as well as for performance and promotion. However, despite HR using these tools, they are often not the key decision-makers for the management of them. That’s according to the Baker McKenzie survey, Risky Business: Identifying Blind Spots in Corporate Oversight of Artificial Intelligence.
“There is an extraordinary amount of potential downside risk in using AI algorithms for people management functions, and a clear disconnect in developing and managing HR-specific, AI-enabled applications,” said Bradford Newman, Palo Alto-based litigation partner at Baker McKenzie. “Given the increase in state legislation and regulatory enforcement, companies need to step up their game when it comes to AI oversight and governance to ensure their AI is ethical and protect themselves from liability by managing their exposure to risk accordingly.”
Related: AI, machine learning bring risk of discrimination and bias
The survey points out that only 54% of the companies questioned say their organization involves HR. Also, only 40% of respondents say they have no oversight into the way AI algorithms “unprank” or downgrade data. Most of the oversight is handed over to IT and chief technologists. In fact, Goerge Avraam, Chair of Baker McKenzie’s North America Employment & Compensation Practice, said, “Senior HR executives have a deep understanding of how bias can adversely impact a workforce and together with their colleagues in legal, should have a bigger role in the development and oversight of the AI tools their companies use.”
Despite the significance of AI to large enterprises, only 36% currently have a Chief Artificial Intelligence Officer (CAIO) in place. The 64% currently lacking CAIOs are in no rush to hire or appoint one: 58% say they will likely hire one at some point, while six percent do not believe they need one.
The need for a CAIO may be overdue: just 41% of respondents said they have AI expertise at the Board level. Even so, 77% of respondents say their organization’s Board of Directors currently has a committee responsible for overseeing the use of AI across the enterprise.
Executives surveyed believe that the top organizational risks to using AI-enabled tools are cybersecurity and data privacy but considered risks around corporate reputation and algorithm bias to be significantly less concerning.
Also, 24% of executives surveyed report that corporate policies for managing AI risks are undocumented – or they do not exist at all. And 24% of those with documented policies deem them only “somewhat effective.”
The lack of negative consequences to date may be partially responsible for the current blind spots on AI. Nearly four in 10 respondents (38%) believe their company’s Board of Directors is not fully aware of how AI is being used across the organization. Corporate governance and the involvement of key stakeholders, such as HR, could help fill the blind spots of AI management tools.
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